The Terms, Conditions of a Loan
Question
What is the procedure recommended for giving a loan to someone, particularly if the borrower belongs to our own family?
Answer
The procedure is very simple. The terms and conditions are first agreed and then they are written down, as dictated by the borrower. This is made clear in the Qur’anic verse giving these details, because the borrower is the weaker party who has to meet these conditions.
Two witnesses are needed. The relevant Qur’anic verse is the longest in the Qur’an, but here are the most important parts of it: “Believers, when you contract a debt for a fixed term, put it in writing, and let a scribe write it down for you with fairness. No scribe shall refuse to write as God has taught him. So he shall write. And let the one who incurs the liability (i.e. the debtor) dictate; and (in so doing) let him be conscious of God his Lord and not diminish anything of it. If he who incurs the liability is weak of mind or body, or unable to dictate himself, then let his guardian dictate with fairness. Call in two of your men to act as witnesses, but if two men are not available, then a man and two women, whom you consider acceptable as witnesses, so that if either of them should make a mistake, the other will remind her.” (2: 282)
The fact that the borrower is a relative, who may be a brother, cousin or uncle, does not change the procedure which is meant to ensure fairness and to remove any possibility of dispute. Unfortunately many Muslims today do not follow this procedure and they often suffer as a result.
Perhaps we should explain that by giving the borrower the right to stipulate the terms agreed is just one example of how Islam ensures fairness in all its dealings. If the lender dictates the terms, he could easily stipulate something that might not have been agreed, and it works in his own interest. The borrower might feel unable to object because he is the party in need of the loan. In order not to allow such a situation to happen, Islam gives the right to dictate the terms to the weaker party, i.e. the borrower.
Islam in Perspective
AB
"For to us will be their return; then it will be for us to call them to account." (Holy Quran 88:25-26)
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